Financial Analysis of Lidl

This assignment provides an analysis of Lidl's financial state through the calculation of current ratio and acid test ratio. The results indicate that Lidl may struggle to pay debts due to high current liabilities compared to current assets. The study concludes by emphasizing the importance of employee specification in job roles, including employability skills, and the need for organizations to have emergency policies and equipment within their buildings.

BUSINESS RESOURCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Recruitment and selection process.......................................................................................1
P2) Required skills for specific job role......................................................................................2
TASK 2............................................................................................................................................3
P3) Physical and technological resources for Lidl.....................................................................3
TASK 3............................................................................................................................................4
P4) Financial sources for business enterprise.............................................................................4
TASK 4............................................................................................................................................5
P5) Financial statements for Lidl...............................................................................................5
P6 Use of budgets for financial control for Lidl........................................................................8
P7 Financial state of Lidl...........................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business resources are considered as critical aspect for every organization because it
allows to have sustainable development. By having an effective reference of resources the
overall performance of business entity can be advanced in critical manner in order to lead
business firm towards impressive level of success. In addition to this, it can be said that by
having an effective focus on the resources the need of business can be accomplished in effective
and efficient manner. It also assists in meeting the operational values in desired manner. Along
with this, the present report will focus on the factors which need to be referred properly for
effective allocation of resources.
TASK 1
P1) Recruitment and selection process
It has been witnessed that number of factors are which need to be referred by businesses
in order to have sustainable development.
 Job Description: It sets out the purpose of a job, where the job fits into the organisation
structure, the main responsibilities of the job and the key tasks to be performed. It will set
out how a particular employee will fit into the organisation. It will therefore need to set
out the title of the job to whom the employee is for whom the employee is responsible for
a simple description of the role and duties of the employee within the organization. It
could be used as a job indicator for applicants for a job. Alternatively, it could be used as
a guideline for an employee and/or his or her line manager as to his or her role and
responsibility within the organization (Montgomery, 2011).
 Person Specification: It is a profile of the ideal candidate for the job. It enables potential
candidate to determine whether they meet the required experience and qualifications. It
also helps employees to identify requirements for the job. A person specification will
help during interviews and it will also help to be used as a basis for staff development,
appraisals and promotions. It details the necessary skills, qualifications, experience or
other attributes needed to carry out the job. Using the person specification throughout the
recruitment and selection process will enable you to ensure that best candidate is selected
and that the legal obligations and best practice objectives.
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 Application Form: An application form sets out information on a candidate in standard
format. It provides a structured basis or drawing up shortlists, the interview itself and the
following actions required in offering an employment and in setting personnel records
(Bruche, 2010).
P2) Required skills for specific job role
In order to have effective development of team activities, it is necessary to have
appropriate development of skills. There are number of skills which need to be referred properly
so that long term goals and objectives can be accomplished effectively. By having consideration
of skills like motivation, leadership, communication, etc the experts can have better
sustainability. It allows maintaining the work performance and lead business to impressive level
of success.
Employ ability skills
Employ ability skills can be defined as a skill that a person needs to have in order to get a
job and/or be effective in the job role he or she has. Such skills allow the employee or person to
have a mutual and friendly relationship with colleagues or the manager thus if there are any
problems that arise they will be resolved efficiently (Monk and Wagner, 2012). There are many
examples of employ ability skills that employees or people applying for jobs should possess
which include; qualification and experience that are directly linked to the job that is being
applied for.
Personal skills
Personal skills can be defined as a skills that a person may possess but doesn’t
necessarily need when applying for a specific job role. There are many examples of such skills
which would benefit the business including; speaking different languages, trustworthy and
having a sense a humour. It is good if employees or applicants possess such sills when applying
for a job as it will make them more likely to get the job as it shows the employer other skills that
the employee/applicant have that can help the business; the skills are useful for a lot of different
jobs.
Communication skills
Communication skills can be defined as a skills that help a person convey information to
another person efficiently and with ease. Managers or employees with good written or verbal
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communication skills will benefit the business; this is because they will be able to talk and
understand each other properly (Schmoldt, Kangas, Mendoza and Pesonen, 2013).
TASK 2
P3) Physical and technological resources for Lidl
Physical
At Lidl the building they use ¡s essential towards the day to day running of the business.
In order for the business to provide products and services to its customers they will need
different in-house resources to facilitate the smooth running of the business. A building on its
own would not be enough for the store to be fully operational, they need materials such as;
shelves (to display items), fridges and freezers (to keep cold and frozen items ¡n the right
condition until they are sold), tills (so they have a recorded system of what is sold and how much
it costs), lighting, computers (for administration) etc.
Another physical resource that is required for the operation of the business is insurance,
some insurances are required by law for businesses to have this includes employers’ liability
insurance which provides insurance in case anything happens to employees as a result of the
business, Lidl also pays for public liability insurance that covers any injuries to the public that
are caused by negligence (Bryman and Bell, 2015). Building and contents insurance is also
necessary to ensure that the store will not lose too much money if the store is ever damaged,
vandalized or stolen from.
Security can be an issue for big companies like Lidl, this is because people find it easier
to steal from big corporations than little independent shops, most Lidl shops are open 24/7 so
they hire security staff that are there around the clock, Lidl also uses security cameras and
security tags (on expensive or commonly stolen items) to facilitate the work of the security
guards.
Organizations are required to have policies and provisions for what should happen if an
emergency within the building occurs. If an emergency was to happen all the employees will
know exactly what to do, organizations must also have the equipment within the building ready
to use if necessary.
Technological
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Lidl uses software that is loaded on to all their technology. The software is the program
that tells the technological items, like tills, what to do, it is loaded with all the bar codes of items
the store sells which means employees can quickly and easily scan items and the tills will add it
up with the least human labor possible, Lidl would not be able to operate well if it didn’t have
the specific software because the software keeps everything in check with what’s coming in and
what’s coming out (Saunders, 2011).
Experience and skills are necessary for Lidl to work as a business, skills are required for
the higher up jobs in the business such as management. Intellectual property needs to be kept
secret as it is required for Lidl to ensure that new ideas they come up with to improve the store
will not be stolen and used in other competing stores.
TASK 3
P4) Financial sources for business enterprise
Some sources of finance are short term and must be paid back within a year. Other
sources of finance are long termed and can be paid back over many years. Internal sources of
finance are funds found inside the business. For example, profits can be kept back to finance
expansion. External sources of finance are funds found outside of the business. In addition to
this, it can be said that bank loan can be concerned as source. Personal saving is most often an
option for small businesses where the owner has some savings available to use as they wish.
Along with this, work capital is short-term money that is reserved for day-to-day expenses such
as stationery, salaries, rent, bills and invoice payments (Armstrong and Taylor, 2014). Limited
companies could look to sell additional shares, to new or existing shareholders, in exchange for a
return on their investment. Debenture loans, with fixed or variable interest, which are usually
secured against the asset being invested in, so the loan company will have a legal shared interest
in the investment. Trade credit is a way of short borrowing and or delaying payments to suppliers
so that the business cycle for Lidl can run smoothly. Delaying payments for as long as possible can
ruin the relationship between the supplier and the business. This may also affect the sales and
discounts that the supplier may offer in the future.
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TASK 4
P5) Financial statements for Lidl
A Trading, Profit and Loss account (Income Statement) can be defined as an account that
highlights a business’s financial performance over a given period of 1 year which includes the
sales revenue, Cost of sales, Gross profit, expenses and Net profit of the organisation or business.
The purpose of the Trading, Profit, and Loss account is to show the business whether or not it
has made a profit or made a loss over that 1 year period thus giving a better insight to the
business owners to see whether the business venture is successful or not and if it’s worthwhile
for them to trade. if an owner sees that he/she are making a huge loss then they may decide to
stop trading as the business venture will be deemed unsuccessful as the business will be losing a
lot of money due to making loss (Cavusgil and et.al., 2014). Turnover can be defined as the
amount of revenue or money generated from sales by a business or organisation over a period of
1 year. The turnover figure for The Lidl in 2014 was £2175,000 and for 2015 the figure was
£3300,000; the difference between the two years accounts for the Lidl is £1125, 000. There are
many reasons why there is a difference of £1125,000 between the two figures for each year; one
such reason may be that in the first year of 2014 the Lidl may have less customers as it had just
introduced itse1f and may have been focusing on another aspect of the business which was to get
through the first year. In the second year the business got a higher turnover because it had been
established for 1 year in the location thus people from the area were well known and familiarized
with the restaurant and ate there (Imam, Chan and Shah, 2013).
Number of customers in the ratio of Sales Revenue and Total Cost.
50 x £25,000 = £1,250,000
100 x £25,000 = £2,500,000
150 x £25,000 = £3,750,000
200 x £25,000 = £5,000,000
250 x £25,000 = £6,250,000
300 x £25,000 = £7,500,000
350 x £25,000 = £8,750,000
400 x £25,000 = £10,000,000
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450 x £25,000 = £11,250,000
Profit and loss account for the LIDL for 2015 and 2016
Balance sheet for LIDL for 2015 and 2016:
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From both the above mentioned profit and loss account and balance sheet of the Idle,
financial position of entity for 2015 and 2016 are identified. However, it is interpreted that
economic performance of the enterprise in 2016 has improved in comparison to 2015. It is
because of increasing demand for product and services as well proper balance between
production and distribution of goods on larger scale. On behalf of this, it can be forecast that in
future time, this monetary position can be maintained and increased efficiently.
P6 Use of budgets for financial control for Lidl
For economic growth of LIDL, preparing budget is essential which is helpful for
analyzing organisation's actual performance by which further decisions are made. It is helpful
optimum utilization of resources and fund (Financial Statements, 2016). However, effective
forecasting can be created regarding increasing sales revenue and profitability of the enterprise.
Therefore, budget is considered as crucial tom achieve effectiveness in business activities and
proper management of entire operations effectively.
P7 Financial state of Lidl
SOLVENCY
Current Ratio
The equation to work out the current ratio is ‘Current Assets/Current Liabilities’.
2013: 2052 I 2585 0.79
2012: 1940 / 2389 0.81
The ratios for both years are less than 1.0-1.5 so this might suggest that LIDL is not well
placed to pay debts as their current liabilities are greater than current assets. LIDL might require
to raise extra finance or extend the time to pay its creditors or pay dividends to shareholders.
Acid Test Ratio
The equation to calculate the acid test ratio is ‘(Current assets - stock)/ Current
liabilities’.
2013: (2052-528) I 2585 0.59
2012: (1940-487) I 2389 0.61
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CONCLUSION
As per the above study, it can be concluded that a person specification will help during
interviews and it will also help to be used as a basis for staff development, appraisals and
promotions. Employ ability skills can be defined as skills that a person needs to have in order to
get a job and/or be effective in the job role he or she has. Such skills allow the employee or
person to have a mutual and friendly relationship with colleagues or the manager thus if there are
any problems that arise they will be resolved efficiently. Organizations are required to have
policies and provisions for what should happen if an emergency within the building occurs. If an
emergency was to happen all the employees will know exactly what to do, organizations must
also have the equipment within the building ready to use if necessary.
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REFERENCES
Books and Journal
Montgomery, C.A. and et.al., 2011. Resource-based and evolutionary theories of the firm:
towards a synthesis. Springer Science & Business Media.
Bruche, G., 2010. Tata Motor's transformational resource acquisition path: A case study of
latecomer catch-up in a business group context (No. 55). Working papers of the institute
of management berlin at the berlin school of economics and law (HWR Berlin).
Monk, E. and Wagner, B., 2012. Concepts in enterprise resource planning. Cengage Learning.
Schmoldt and et.al., 2013. The analytic hierarchy process in natural resource and environmental
decision making. Springer Science & Business Media.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Saunders, M.N., 2011. Research methods for business students, 5/e. Pearson Education India.
Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
Cavusgil and et.al., 2014. International business. Pearson Australia.
Watahiki, K., Ishikawa, F. and Hiraishi, K., 2011. Formal verification of business processes with
temporal and resource constraints. In Systems, Man, and Cybernetics (SMC), 2011 IEEE
International Conference on. 89(6). pp.1173-1180.
Online
Financial Statements. 2016. [Online]. Avaialable through:
<http://download.nos.org/srsec320newE/320EL13.pdf>. [Acessed on 8th September
2017].
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